SIC 5521 Motor Vehicle Dealers (Used Only)

 
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SIC 5521

This category covers establishments primarily engaged in the retail sale of used cars only, with no sales of new automobiles. These establishments also frequently sell used pickups and vans at retail. Establishments that sell both new and used cars are classified in SIC 5511: Motor Vehicle Dealers (New and Used).

NAICS CODE(S)

441120

Used Car Dealers

INDUSTRY SNAPSHOT

The National Independent Automobile Dealers Association (NIADA) reported that 43 million used cars valued at $370 billion total were sold in 2002, also noting that the average age of vehicles on the road was about 8.5 years. NIADA concluded that the used car sales would remain at about 40 million in the coming years. In 2003, used vehicles accounted for 28.3 percent of the overall market. According to the National Automobile Dealers Association (NADA), new car dealers purchased some 19.4 million used cars in 2003. NIADA also reported that there were more than 16,000 independent dealers in the United States in 2003. Many independent used-car dealers belong to NIADA, which reported that its members sold between 1 million and 2 million vehicles annually and that the average used-car dealer has been in business for more than 22 years.

The majority of the independent dealers were concentrated in Texas with 7,465 dealerships. California had 5,217, Florida had 3,920, and Pennsylvania had 3,069. The largest segment was used automobiles only, a segment that commanded more than 77 percent of the market. Used car dealers had 20 percent of the market. There were 507 dealers of used trucks, tractors, and trailers, and 118 dealers of used pickups and vans.

The industry reported 60,239 independent dealers throughout the United States in 2005, with industry sales of $37.09 billion, while employing an estimated 195,135 workers. Used cars only numbered 46,222 dealerships, or 76.7 percent of the market, with combined sales of $28.59 billion. Used car dealers were responsible for 12,654 dealerships or 21 percent of the market, while used pickups and vans generated $82.3 million through 105 dealerships. Antique automobiles were also included within this industry, with 688 locations and $325.5 million in sales. Lastly, there were 570 dealers that retailed used trucks, tractors, and trailers, contributing $676.2 million to the overall industry sales.

BACKGROUND AND DEVELOPMENT

The used-car industry grew out of the automobile manufacturing industry. When manufacturers began encouraging their customers to trade in old cars and purchase new models, used cars became increasingly available. By the mid-1920s, used-car lots were a part of the American landscape.

The abundant availability of cheap used cars made car ownership within reach of almost everyone. In 1927, the average four-year-old "basic transportation" car sold for approximately $100, and although low income families were unable to buy new cars, even on installment, approximately 64 percent of American families did own an automobile of some kind.

During the Depression years, sales of new cars plunged, but car usage declined only slightly. In 1929, 26.7 million vehicles were registered. The number fell to a low of 24.16 million in 1933. People kept their cars longer and looked to the used-car market when replacement was necessary. Used cars and trucks also served to carry thousands of displaced farmers from the Dust Bowl region into California.

As the nation emerged from the Depression, car sales increased. Vehicle registrations in 1937 topped the 30 million mark. Strengthening new car sales served to fuel the used-car market. In 1938, the nation's first automobile auction was held in South Carolina; the first car auctioned was a 1932 Ford Model A.

Used cars also played an important role during World War II. During the war, production of civilian automobiles halted, and once again people held onto their cars as long as possible. Sales of parts soared, and as cars wore out people turned to used-car dealers for replacements. Used-car prices were controlled by the Office of Price Administration, but according to automotive historian, Stephen W. Sears, "under-the-table dealing frequently raised the price of old...

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